US Economic Growth Slumps as Consumers Pull Back Amid High Mortgage Rates

The US economy has lost momentum in the second quarter, according to a recent report from the California Association of Realtors (CAR). The growth rate slipped to an annual pace of 1.5%, down from 2.1% in the first quarter and below the forecasted 2.1%. This slowdown is attributed to consumer confidence waning, with the Consumer Confidence Index falling to 90.8 in July after three straight monthly declines.

Construction spending also slowed, decreasing by 0.1% in June to a seasonally adjusted annual rate of $2,166.5 billion. Homebuilding was particularly weak, with single-family construction down 3.3% from the previous year due to high mortgage rates. The average 30-year mortgage rate climbed to 6.66%, its highest level in a year.

The Federal Reserve maintained interest rates for a fifth consecutive meeting, but three regional bank presidents dissented in favor of a hike. New Fed Chair Kevin Warsh cited elevated inflation tied partly to energy shocks stemming from the conflict in Iran.